When the Price Level Is Rising and Simultaneously Real GDP

question 335

Multiple Choice

When the price level is rising and simultaneously real GDP is decreasing,

• A) stagflation occurs.
• B) the Fed has increased the discount rate.
• C) there is an expansionary gap.
• D) the natural unemployment rate increases.

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Definitions:

Profit Margin

A ratio or percentage that measures the profitability of a business, calculated by dividing net income by revenue.

Investment Center

A segment or area of a business responsible for its own revenues, expenses, and investment in assets, often evaluated on its return on investment.

Authority

The ability or prerogative to issue commands, decide on matters, and compel adherence.

Decisions

The choices made by individuals or organizations among two or more alternatives.